Florida A&M University College of Law Scholarly Commons @ FAMU Law Journal Publications Faculty Works Spring 1995 Contracting in the Americas: Part I Ronald C. Griffin [email protected] Follow this and additional works at: http://commons.law.famu.edu/faculty-research Recommended Citation Ronald C. Griffin,on C tracting in the Americas: Part I, 34 Washburn L.J. 232 (1995) This Article is brought to you for free and open access by the Faculty Works at Scholarly Commons @ FAMU Law. It has been accepted for inclusion in Journal Publications by an authorized administrator of Scholarly Commons @ FAMU Law. For more information, please contact [email protected]. Contracting in the Americas: Part I Ronald C. Griffint INTRODUCTION Working on this paper rekindled youthful memories. I recall my family and all the funny characters; the small town outside Washington, D.C. I called home; the Five-and-Dime Store where I bought toys and the corner grocery. This was my America (towns and quaint settings). Communities were held together with nostalgia. Citizens used the foibles of their neighbors to entertain themselves. Old folks used folk tales to teach children about civilization's harsh realities. The world, they told us, was a dying place. People and machines slowed down and eventually stopped operating. To cope with the losses prompted by change, youngsters had to gather as much happiness and entertainment as they could manage in their lives. In an America held together with nostalgia, citizens worshipped competition and the market mechanism. The world was defined by what people saw and heard. Contract law affirmed the work of enterprises producing goods that commanded economic value. Damages put people in positions they would have enjoyed if promises had been kept. Community disapprobation and local magistrates kept the mavericks in check. Crime was not the ubiquitous thing it is today. This vision (at best isolationist) left Americans ill-equipped to deal with global problems. It did not furnish me (us) with a sophisticated vocabulary and a medium of discourse to cope with rapacious corporations, job dislocations, unruly foreign governments and international trade. America needed a new vision. Freud' and Drucker' supplied one. The world, they wrote, had gone through a westernizing process. Decoloniza- tion (local control of events) had taken root in Africa and Asia. Europeans (the agents of change) had retreated to their continent. Many maintained a presence in North America, South America and the southern tip of Africa. t Professor of Law, Washburn University School of Law; B.S. 1965, Hampton Institute; J.D. 1968, Howard University; LL.M. 1974, University of Virginia. I wish to thank Jennifer Grier for her assistance on the preparation of this article. 1. Sigmund Freud, Thoughts for the Times on War and Death, in 54 GREAT BOOKS OF THE WESTERN WORLD 755-66 (Mortimer J. Adler ed., 1982). 2. PETER F. DRUCKER, THE NEW REALMES 3-58, 115-72 (1989). Contracting in the Americas There were civil wars in Europe (World Wars I and II) that never produced a victor. The United States and the Soviet Union were the apparent winners. The vacuum (hegemony to be won from decimated European powers) was filled by the aforementioned nations. In time, the United States and the Soviet Union got sucked into the Great Commercial Basin. Now the Basin's frontier begins with the state of Washington, in the United States, and extends east to the farthest European outpost in Rus- sia.3 Observers can see the market mechanism pumping riches from the landscape. Commercial discourse has been reduced to conversational English, French, Spanish, Russian, and German. The United States and Canada and the United Kingdom and France have been granted domains. Countries have formed economic unions, like NAFTA and EC, to free their people to compete with decolonized rivals like the City-State of Singapore, Saudi Arabia, Vietnam and Iraq. Commercial laws have been reduced to tools to husband understanding and cooperation between basinites in an arena strewn with cultural obstacles. Utterances and representations-prompting detrimental reliance-have been reduced to obligations. Utterers, actors and reactors have submitted to a duty to act in good faith. Breach of the duty has given the injured party the right to modify an obligation or demand specific performance. When obligations have come to dreadful conclusions, the injured party has used international business conventions; the publication of the utterer's bad reputation; the law of obligations; and, reliance and balance theory;4 to wrench their expectation from the malefactor. These observations bring me to the task at hand. Having abandoned nostalgia for basin concepts the question is: What will become of contract law in North America? (There is a simple answer.) The law will get refashioned to deal with ceaseless change. Expectation Theory will guide what the jurisprudential alchemist do. This article surveys contract theories-the jurisprudence of our predecessors which haunts our practice. It covers ancient history, the views of Law Merchants, Objectivists, Revisionist, Relationist and some secured transaction cases. ANCIENT HISTORY Contract law is rooted in expectation theory It is something that 3. Id. at 27-30. 4. Joel Levin & Banks McDowell, The Balance Theory of Contracts: Seeking Justice in Volun- tary Obligations, 29 MCGILL L.J. 24 (1983). 5. P. S. ATIYAH, THE RISE AND FALL OF FREEDOM OF CONTRACT 82-83, 105, 576-77 (1979). It is a way to capture reasons for ordering specific performance or awarding damages. See Contracts, Torts, Relations and Reliance, in STUDIES IN CONTRACTS LAW 236-311 (Barry J. Reiter & John Swan eds., 1980). If a promise is purchased with consideration, the plaintiff is entitled to contract damages. Damages amount to money a plaintiff needs to put her in a position she would have achieved absent breach. David H. Vernon, Expectancy Damages for Breach of Contract: A Primer and Critique, WASH. U. L.Q., Spring 1976, at 179, 183-89. It could be a sum to buy goods she sought in the Washburn Law Journal [Vol. 34 emerged during the Norman Conquest.6 After the Normans pacified England they gave the booty to proxies to entrench Norman influence. 7 To insure that Norman influence survived the death of proxies, they invented estates in land.' The esteem heaped upon proxies was overtaken by the attention given to estates. Proxies and estates filled the void created by the Norman exit.9 People (then) literally owned the wilderness. Individuals obsessed about property - eg., fields and streams, fish and game.'" Rivals vied for property using power, profit, status, utility and violence to settle their spats. I' In me, contract law overtook violence. 2 Competitors discovered that it was cheaper than violence and (much to their delight) rivals were inclined to sell their designs upon property. The purchaser's expectation was his rival's forbearance. The rival's expecta- tion was compensation. Expectation Theory flourished during this age of feudalism. 3 The theory amounted to the homage an estate holder owed a king or the forbearance a person extracted from someone with a contract. 4 The publication of the Wealth of Nations crystallized things. A chunk of expectation theory incubating inside contract law was added to this work. Merchants (a small band of entrepreneurs) used this to rationalize their decisions and actions. bargain or the financial gain she has lost. On a deeper level, it's implementing the articulated desires of the parties. 6. ATIYAH, supra note 5, at 105-06. Medieval lawyers had used property law to regulate future arrangements concerning land. It was a situation which modem lawyers would describe as contractual. See also 8 ENCYCLOPEDIA BRITANNICA, MICROPAEDIA 767; 22 ENCYCLOPEDIA BRITANNICA, MACROPAEDIA 929; 29 ENCYCLOPEDIA BRITANNICA, MACROPAEDIA 33, 36. 7. 8 ENCYCLOPEDIA BRITANNICA, MICROPAEDIA 767. 8. Id. See 22 ENCYCLOPEDIA BRITANNICA, MACROPAEDIA 929. 9. See ROBERT MCCRUM ET AL., THE STORY OF ENGLISH 73, 75-76 (1986). John was the last Norman King (1199-1216). He lost his fortune in France. In 1209, he was excommunicated by Pope Innocent. 29 ENCYCLOPEDIA BRITANNICA, MACROPAEDIA 37-38. 10. E.P. Thompson, Professor of History, Warwick University, Lectures on Customs and Common Rights at Queen's University, Kingston, Ontario, Canada (Feb. 3 & 10, 1988) (discussing the public obsession with property) [hereinafter Thompson Lectures]. See E.P. THOMPSON, WHIGS AND HUNTERS: THE ORIGIN OF THE BLACK ACTS 196-97 (1975). 11. Thompson Lectures, supra note 10. 12. Id. 13. 29 ENCYCLOPEDIA BRITANNICA, MACROPAEDIA 33. 14. Thompson Lectures, supra note 10. Copyholders were manor proxies, i.e., serfs who behaved as if they owned property outright. Their status emerged from transactions that were "grants of land for services." Their rights in land were conditional. Their claim had to be registered in the manor courts. The serfs had to render services or pay quick rent to the granting Lord to keep their property. Interview with E.P. Thompson, Professor of History, Warwick University, at Queen's University, Kingston, Ontario, Canada (Mar. 21, 1988). There were comparable transactions outside of the manorial setting. William the Conqueror gave large parcels of land to 180 great Tenants-in- Chief for knights service. 29 ENCYCLOPEDIA BRITANNICA, MACROPAEDIA 33. 1995] Contracting in the Americas LAW MERCHANTS From the perspective of law merchants, contract law compensated people who relied upon promises.